Photo by Elisa Ventur on Unsplash When you make a mistake on your Form 1040, the best thing that could happen is the Internal Revenue Service will catch your relatively insignificant error, fix it, and send you a notice about the change. A worse outcome is the IRS changes reduce and/or delay the refund you're expecting. And the absolute worst tax error outcome is that your mistake isn't a minor one, and the IRS decides to take a longer, closer look at your filing. The only way to avoid these situations is to double check your return to ensure it's... Read more →
Blinders may work for horses, but they're terrible for taxpayers who might miss out on some tax savings. (Photo by Graham Ruttan on Unsplash) The Tax Cuts and Jobs Act's expansion of the standard deduction amounts means even more taxpayers are using that filing method. Most think that since they don't itemize, they don't need to worry about tax breaks. They're wrong. There are the above-the-line deductions, officially known as adjustments to income, that anyone can take (if they qualify), regardless of whether they take the standard deduction or use Schedule A. Then there are some tax credits, again available... Read more →
If you're in your seventies, it's time to start preparing for nest egg withdrawals, some of which are required by federal tax law. A couple of new retirement laws over the last few years, collectively known as the Setting Every Community Up for Retirement Enhancement (SECURE) Acts, have made a lot of changes to retirement plans and the collection of associated taxes. One revision was the bumping up the date when most older owners of tax-deferred retirement accounts must start taking some money from these savings. Starting in 2023, required minimum distributions, known by the acronym RMDs, don't kick in... Read more →
Photo by Annie Spratt on Unsplash Unless we're getting a big refund, most of us put off dealing with our taxes. That's happening again this filing season. The Internal Revenue Service reports that through March 10, it had received 63.4 million returns. That's about the same number of returns it received at the same point last year. If 2023 filings continue to follow the 2022 pattern, then the IRS is still waiting for more than 100 million returns. Some people have good reasons for the delay. Their tax situations are complicated, taking time to sort through. Others are missing necessary... Read more →
Photo by Andrea Piacquadio Forgiveness of debt piled up by college students has been a campaign mainstay in recent elections. It finally became a reality in August 2022. Sorta. On Aug. 24, 2022, President Joe Biden directed the Department of Education to forgive up to $10,000 per borrower of federally-held student loan debt, $20,000 for those who went to school on Pell grants. The next month, six Republican state attorneys general filed a lawsuit to stop the Biden move. In October 2022, a federal appeals court ordered the loan forgiveness plan put on hold while the case is considered. Now,... Read more →
Photo by Emanuel-Kluge via Flickr When U.S. residents make international moves for work, there's one part of the country that goes with them. They remain U.S. taxpayers, filing federal tax returns on the on their overseas earnings. Uncle Sam, however, does provide some tax breaks to his citizens living and working abroad. Their filing deadline is June 15. Thanks to tax treaties, globally peripatetic taxpayers also get certain foreign earned income exclusions and/or foreign income tax credits. These exclusion amounts also are affected by the cost of living, as noted in Part 8 of the ol' blog's 2023 annual inflation... Read more →
Photo by Chris F In February, Austin took another winter weather hit. A surprisingly heavy freeze ended with broken tree limbs taking out power lines, leaving tens of thousands of Austin households and businesses without electricity for days. We were among the powerless. During the three days we sat huddled in our increasingly cold house, griping about the third consecutive and unusually cold winter (thanks, no thanks, La Niña!), we realized we needed to look into making some improvements to our house. The energy efficient upgrades will also help in a couple of months when we're dealing with the area's... Read more →
It takes a different kind of math to figure possible tax credit help to cover college costs. (Photo by Karolina Grabowska) It's spring break time for many students. But it's also time for a refresher on how the tax code can help them (or their parents who are footing at least some university costs) pay for those classes they're taking a respite from now. The Internal Revenue Code contains two popular educational tax credits, the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is the one most undergraduate students (or their parents) will claim. It's... Read more →
… and some special instructions for those who owe $1 or less or $1 million or more. While bank checks may seem antiquated to most people today, some people still like to pay that way. That includes writing a check to cover their tax bill. (Photo by Steve Shook via Flickr CC) Since most of us e-file our taxes, it's only natural that when we owe, we pay Uncle Sam electronically, too. But most is not all. Some folks still file paper returns. And some taxpayers who do e-file still prefer to pay with an old fashioned, handwritten paper check... Read more →
Credit cards are a popular way to pay taxes, but there are several other ways to e-pay what you owe the IRS. (Photo by Mika Baumeister on Unsplash) Mark this day. Tax Day is more than a month away, but I finished up the ol' 1040 today. Really! As expected, and as usual, my tax calculations revealed that we owe Uncle Sam a couple hundred bucks. So I went to my Electronic Federal Tax Payment System (EFTPS) account and scheduled payment of our 2022 tax amount for April 18, as well as our 2023 estimated tax payments for that day... Read more →
As a true crime junkie (I blame my first newspaper reporting job covering the police beat) and tax geek, the headline about a senior bank official's guilty pleas to embezzlement and tax evasion immediately caught my eye. The Michigan man, a bank senior vice president, confessed in court on March 6 to embezzling $870,000 from the financial institution between 2014 and 2021. Then he compounded his troubles by involving the Internal Revenue Service. Specifically, according to the press release issued by the U.S. Attorney's Office for the Western District of Michigan, the 56-year-old Grand Rapids man — "… generated taxable... Read more →
Image via CFI Even before film makers began sticking extra scenes at the end of credits, I sat in the darkened theater until the last credit rolled. I do the same when I screen movies and television shows at home … when I can. As I tweeted today, I'd love it if streamers used an artificial intelligence (AI) program to note that I like to watch full show openings. And recaps. And all the closing credits. OK, not so much the information about who's dubbing the actors when the shows are streamed in other countries, but I do use that... Read more →
UPDATE, March 12, 2023: Congratulations to all those who won Academy Awards tonight, especially the big winner, "Everything Everywhere All at Once." The movie, known on social media as #EEAAO (or #EEAO if you don't want to include the preposition) proved that this year's major Hollywood event definitely wasn't your grandparents' Oscars. The wildly imaginative film, which featured a tax audit, won best picture. Three EEAO stars, Michelle Yeoh, Ke Huy Quan, and Jamie Lee Curtis, won acting Academy Awards. And original screenplay and directing Oscars went to The Daniels, Daniel Kwan and Daniel Scheinert. Jamie Lee Curtis, far left,... Read more →
White House Budget video screenshot. Full video is available at Facebook and Twitter. The Biden Administration released its fiscal year 2024 budget today (March 9, 2023). Thanks to previews from President Joe Biden, there are no surprises as far as taxes. "I want to make it clear I'm going raise some taxes," Biden to told a group in Virginia Beach, Virginia, who gathered Feb. 28 to hear about healthcare. "Many of you are billionaires out there. You're going to stop paying at 3 percent. Not a joke." The president's promise was put in writing today with the issuance by the... Read more →
Photo by Army SPC Sara Wakai In addition to their duties as members of the armed forces, U.S. service members also have to answer to the Internal Revenue Service. When it comes to those taxes, many military men and women must deal with situations vastly different from civilian taxpayers. They also get some special tax considerations. Here are some resources to help members of the military community navigate their sometimes complex tax situations. Official IRS guide: The IRS' Armed Forces' Tax Guide is a good place to start. The 39-page PDF document, officially known as IRS Publication 3, covers the... Read more →
Photo by Liza Summer The Tax Cuts and Jobs Act's substantial increase in standard deduction amounts accomplished one of its supporters' major goals. More taxpayers have an easier time filing now because they claim the standard deduction. But the 2017 tax reform law had a less-welcome side effect. Charitable giving, which must be claimed as an itemized deduction, has dropped. Even for wealthier taxpayers, who are the most likely to still itemize and who under the law change can claim an even larger percentage of their charitable gifts, deductible donations have plummeted. Some federal lawmakers, however, are hoping to change... Read more →
Photo by Tim Mossholder If you need some help with a tax that's NOT filing your annual return, Internal Revenue Service staff might be able to provide some in-person help this weekend. The second round of the agency's Saturday walk-in hours at certain Taxpayer Assistance Centers (TACs) nationwide will take place on March 11. IRS TACs normally are open on weekdays only, and taxpayers must make appointments to receive services. TAC help options: But during these special Saturday hours, walk-ins are welcome to get the help that the centers usually provide, except for making cash tax payments. If you need... Read more →
Photo by Kris Gonzalez via Flickr CC Parenting presents many challenges. One of them is finding quality child care. The tax code can help a bit here if you, and your spouse if you're married, both work. The Child and Dependent Care Credit offsets some child care expenses. Since it's a tax credit, it does that by reducing your tax liability dollar-for-dollar. But if you're a working mom or dad who enjoyed the pandemic-prompted enhancements to the child care credit last year, get ready to be disappointed when you file your 2022 return. The tax break afforded by the Child... Read more →